Thinking about buying a Rockville condo?
The total sales price shouldn’t be the only number you’re concerned with.
Read on to learn about the closing costs in Montgomery County and how to determine the amount of money you’ll be on the hook for as a buyer.
As a general rule, you’re looking in the neighborhood of 3% of total sales price.
If you’re a stickler for details and hate surprises, however, today is your day.
Below, I’ve broken out each of the potential costs and withholding for a condo purchase.
Of course, for full clarity about your specific situation, it’s best to consult with a real estate agent or settlement company.
Loan costs – as the headline implies – are only applicable in cases where the buyer is financing the property.
These will vary by lender, but here are some of the costs you can expect
Note: Some of these fees will be paid at closing while others might be paid along the way – OR covered by the lender itself.
Loan Origination Fee/Discount Points (each point = 1 % of loan amt.)
Appraisal ($300 to $600)
Appraisals for condos are around $300 to $600 and sometimes paid outside of closing.
Credit Report ($15-$75)
This one is often covered by the bank.
Misc. Loan Fees (Doc. Preparation, Processing, Tax Service, Underwriting, etc.: ($450-$1,000)
Your guess is as good as our as to what your final numbers will be.
Luckily, banks are forced to be more transparent nowadays.
In rare financing situations, it’s possible you could take out a second mortgage on a property at the time you buy it.
These are items the bank is going to make you pay ahead of time in order to protect its investment.
Again, these amounts will vary by bank
Prepaid Interest on New Loan
This number is usually based on 30 days.
If you are putting more than 20% down on the purchase, there is usually no mortgage insurance.
If you are putting less than 20%, you will likely pay a few hundred dollars a month.
There are, however, special programs and exceptions to the rule.
FHA or VA Funding Fees
Homeowner’s Insurance Premium
You’ll pay upfront for one year’s worth of home insurance.
These dollar amounts will be “escrowed” by the bank on your behalf, and are also due upfront.
If you’re not sure what “escrow” means, check it out before reading on.
Usually two months premium.
Real Estate Taxes
In Maryland, an estimated 10 months (14 months if the buyer is not an owner occupant).
The attorneys or closing agents who prepare the property for sale (re: make sure the numbers match and the seller has the legal right to sell the property) have an array of charges they incur.
Keep in mind the buyer has the right to select the title company.
$500 to $1,000
Title insurance is typically purchased for both the lender (to protect the bank) and the owner (to protect the buyer).
This ensures that if there is a defect in title (for example, the person selling the property was not who they said they were and fraud was involved), all parties are protected.
In many cases, a “reissue rate” is available that lowers the price.
Lender’s Coverage Only
$2.80 per $1,000 of loan amount
Owner’s Coverage Only
$4.00 – $4.75 per $1,000 of sale price (MD)
Owner’s & Lender’s Coverage
Add $100- $150 to Owners Coverage
Note: Some or all of the above charges may appear as one lump sum on the final settlement statement.
Depending on the type of property and the requirements of the bank/loan program, there could some additional costs such as….
$50 – $150
About $300 to $500
Condominium, Cooperative or HOA Dues
Pro-rated amount plus one full month or quarter.
It will depend on the condo’s rules.
In Montgomery County, it’s typically agreed upon the buyer and seller will split the County Transfer Tax, State Transfer Tax, and County Recordation Tax costs equally.
In some cases, the buyer will request the seller’s help to cover these.
It’s important to factor any such request into the total net profit for the seller, as well as the net amount due for the buyer.
County Transfer Tax
Assuming the property is worth $70,000 or more (which would cover most any residential property), the county transfer tax is equal to 1% of sales price.
State Transfer Tax
The state transfer tax is equal to ½% of the sales price.
If the buyer is first-time homebuyer in the State of Maryland, the state will pay the buyer’s ¼%.
County Recordation Tax
The count recordation tax is equal to .89% any Sales Price up to $500,000.
It bumps to 1.35% for any amount over $500,000
Subtract $890 if the buyer is using residence as primary residence
This number is typically a percentage, but not always, and reflects the amount negotiated with your agent/broker.
It is usually split with the transaction’s listing agent and brokerage.
Brokerage Admin Fee
In addition to the broker commission, there is also generally a broker “admin fee” that ranges between $0 and $600.
Attorney/Settlement Fee – Release Prep, Release Recording Fee
The attorney/settlement fee costs between approximately $500 to $1,000 and include costs associated for making the sale official.
Note that the buyer has the right to select the title company and it is included as part of the contract.
Other Contract Expenses
There can be some other minor costs here but these are usually minimal.
Home Buyer’s Warranty
This is optional as well, but a warranty for the buyer – assuming the buyer bought his/her own and it was not provided by the seller – could cost approximately $300 to $600.
The title company will make adjustments for any taxes and condo dues the seller has already paid/not paid.
In Montgomery County, taxes are due twice a year – September 30th and December 31st.
The fiscal year starts July 1st.
The payment due September 30th covers taxes from July 1st to December of the current year.
The payment due on December 31st covers taxes from January 1st to July 1st of the following year.
Depending on when you close on your property – and when taxes have been paid by the seller (or in many cases, when the bank has paid them on the seller’s behalf) – these monies added to the buyer’s total costs.
Rent Back and Security Deposits
If there is a “rent-back” situation – where the buyer has taken possession and agreed to let the seller “rent” the property until the seller moves out (this can be up to 60 days) – the negotiated amount will be credited to you at closing.
When move into a condo – and are financing – there is a questionnaire banks must receive in order to understand the financial well-being and/or risks associated with the building.
It usually costs $50 to $100 to have this questionnaire filled out, and the bank will often pay for it themselves.
Most condos charge somewhere between $150 and $500 as a move-in fee.
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